Doctoral thesis of philosophy determinants of bilateral export flows in the world economic integration process, the case of vietnam (1986 2010) a gravity approach

DETERMINANTS OF BILATERAL EXPORT FLOWS IN THE WORLD ECONOMIC INTEGRATION PROCESS, THE CASE OF VIETNAM 1986-2010: A GRAVITY APPROACH A thesis submitted in fulfillment of the requirements

DETERMINANTS OF BILATERAL EXPORT FLOWS IN THE WORLD ECONOMIC

INTEGRATION PROCESS, THE CASE OF VIETNAM

(1986-2010): A GRAVITY APPROACH

A thesis submitted in fulfillment of the requirements for the degree of

DOCTOR OF PHILOSOPHY

In Economics and Finance

Tung Tri Nguyen

Master of International and Development Economics

The Australian National University

School of Economics Finance and Marketing

College of Business

RMIT University

Feb 2015

Declaration

I certify that except where due acknowledgment has been made, the work is that of the author

alone; the work has not been submitted previously, in whole or in part, to qualify for any

academic award; the content of the thesis is the result of work which has been carried out since

the official commencement data of the approved research program; any editorial work, paid or

unpaid, carried out by a third party is acknowledged; and, ethnic procedures and guidelines have

been followed

Tung Tri Nguyen

February 25, 2015

ACKNOWLEDGMENTS

This thesis is due to the helpful contributions from supervisors, academic staffs and

colleagues

I am indebted to Associate Professor Dr Seema W.D Narayan, the senior supervisor, for

her intensive supervision I, indeed, appreciate her instruction, suggestions, comments, editing,

and care for every steps of this thesis The thesis started with useful research questions and

appropriate motivation; however, it was in a difficult to select the best methodology to quantify

these questions It was that Professor Dr Seema W.D Narayan has directed me to the relevant

methodology amongst alternatives Moreover, I have drwan such important things from her

supervision, in which the most important thing is her technique in doing a research

I would also thank Dr George Tawadros, the co-supervisor, for his suggestions on the

issue of methodology Dr George Tawadros is enthusiastic lecturer to provide feedbacks on the

progress of thesis writing

I would have great thanks to staffs from the School of Economics, Finance, and

Marketing; and the School of Graduate Research for their supports during the whole period of

this thesis The success in the milestones of this thesis has been attributed from useful

assessment, comments from Dr Ashton de Silva, Associate Professor Dr Heather Mitchell In

addition, I especially thank Ms Prue Lamont, Ms Kalpana Lalji, Ms Esther Ng, Ms Claudia

Jorquera, and Mr Owen Shemansky for their supports and arrangements association with the

administrative procedures

I was also having passion in doing the research that has been encouraged from colleagues

in School of Economics, Finance, and Marketing I would thank to their shares in studying

ABBREVIATIONS

NAFTA North American Free Trade Agreement

TABLE OF CONTENTS

SUMMARY 1

CHAPTER 1 4

1 INTRODUCTION 4

1.1 INTRODUCTION 4

1.2 MOTIVATION OF THE DISSERTATION 4

1.3 AIMS OF THE DISSERTATION 6

1.4 RATIONALE OF THE DISSERTATION 6

1.5 ORGANIZATION OF THE DISSERTATION 8

1.6 SUMMARY 9

CHAPTER 2 11

2 ECONOMIC DEVELOPMENT AND TRADE PERFORMANCE IN VIETNAM BETWEEN 1986 AND 2009 11

2.1 INTRODUCTION 11

2.2 VIETNAM’S KEY ECONOMIC ACHIEVEMENTS IN THE LAST THIRTY YEARS 11

2.3 THE WORLD ECONOMIC INTEGRATION AND TRADE RELATIONSHIPS WITH MAJOR TRADING PARTNERS 23

2.3.1 World economic integration process 23

2.3.2 Major trading partners 26

2.3.3.1 Trade with ASEAN 29

2.3.2.2 Trade with United States 32

2.3.2.3 Trade with Japan 33

2.3.2.4 Trade with European Union (EU) 35

2.4 SUMMARY 37

CHAPTER 3 39

3 LITERATURE REVIEW 39

3.1 INTRODUCTION 39

3.2 STANDARD GRAVITY EQUATION AND TRADE 40

3.3 THEORETICAL CONSIDERATIONS ON GRAVITY EQUATION 43

3.3.1 Complete specialization 43

3.3.2 Heckscher – Ohlin model (H-O) 55

3.3.3 Increasing return to scales and Monopolistic competition 61

3.3.4 Other trade theories and gravity equations 65

3.4 EMPIRICAL STUDIES ON APPLIED GRAVITY TRADE MODELS 68

3.5 CONCLUSION 77

CHAPTER 4 83

4 METHODOLOGY 83

4.1 INTRODUCTION 83

4.2 THE GRAVITY MODEL 83

4.3 MULTILATERAL RESISTANCE FACTOR 85

4.4 THE EMPIRICAL MODELS 89

4.5 ESTIMATION METHOD 93

4.6 PANEL DATA TESTS 96

4.6.1 Panel unit root tests 97

4.6.1.1 LLC unit root test 97

4.6.1.2 IPS unit root test 101

4.6.1.3 ADF – type unit root test 104

4.6.2 Panel cointegration tests 105

4.6.2.1 Pedroni test 105

4.6.2.2 Kao test 108

4.6.2.3 Maddala and Wu 110

4.7 CONCLUSION 112

CHAPTER 5 114

5 DETERMINANTS OF BILATERAL EXPORT FLOWS DURING REGIONAL AND WORLD ECONOMIC INTEGRATION – AGGREGATE ANALYSIS, VIETNAM (1986-2010) 114

5.1 INTRODUCTION 114

5.2 DATA 115

5.3 PANEL TEST RESULTS 118

5.3.1 Unit root tests 118

5.3.2 Co-integration tests results for bilateral export models 120

5.4 LONG-RUN RESULT ANALYSIS 121

5.4.1 Income groups 121

5.4.1.1 Nominal export estimation 121

5.4.1.2 Real export estimation 125

5.4.1.3 Multicollinearity amongst income-sourced variables 128

5.4.2 Regional groups 131

5.4.2.1 Nominal exports 131

5.4.2.2 Real exports 134

5.4.2.3 Multicollinearity amongst income- sourced variables 139

5.5 SHORT-RUN ANALYSIS 144

5.5.1 Short-run estimation: Income groups 144

5.5.1.1 Nominal exports 144

5.5.1.2 Real exports 145

5.5.2 Short-run estimation: Regional groups 148

5.5.2.1 Nominal exports 148

5.5.2.2 Real exports 151

5.6 NOMINAL vs REAL EXPORTS 153

5 6.1 Comparison within the income groups 154

5 6.2 Comparison within the regional groups 155

5.7 A COMPARISON OF THE BILATERAL EXPORTS-GRAVITY MODEL BETWEEN VIETNAM AND SINGAPORE 158

5.7.1 Export performance and data description – Singapore 158

5 7.2 Methodology and Data testing 160

5.7.3 Bilateral export effects in gravity framework – Vietnam vs Singapore 161

5.7.3.1 Income groups 166

5.7.3.2 Regional groups 170

5.8 CONCLUSION AND REMARKS 175

CHAPTER 6 178

6 DETERMINANTS OF SECTORAL BILATERAL EXPORTS DURING THE WORLD AND REGIONAL ECONOMIC INTEGRATION: AND EMPIRICAL STUDY ON 24 SECTOR, VIETNAM (1986-2010) 178

6.1 INTRODUCTION 178

6.2 DATA DESCRIPTION AND SAMPLE DIVISION 179

6.3 EMPIRICAL GRAVITY MODELS FOR EXPORTING SECTORS 181

6.4 PANEL UNIT ROOT TESTS AND COINTEGRATION TESTS – SECTORAL ANALYSIS 184 6.4.1 Results of unit root tests 184

6.4.2 Results of cointegration tests for sectoral export models 191

6.5 RESULTS – ANALYSIS OF BILATERAL EXPORTS BY SECTORS 195

6.5.1 Articles of apparel and clothing accessories (s2-84) 196

6.5.1.1 Income groups 197

6.5.1.2 Regional groups 201

6.5.2 Petroleum, petroleum products and related materials, (s2-33) 204

6.5.2.1 Income groups 205

6.5.2.2 Regional groups 209

6.5.2.3 Sectoral results vs aggregation results 209

6.5.3 Footwear (s2-85) 211

6.5.3.1 Income groups 212

6.5.3.2 Regional groups 216

6.5.3.3 Sectoral results vs aggregation results 217

6.5.4 Fish, crustacean and molluscs, and preparations (s2-03) 219

6.5.4.1 Income groups 220

6.5.4.2 Regional groups 224

6.5.4.3 Sectoral results vs aggregation results 225

6.5.5 Cereals and cereal preparations (s2-04) 227

6.5.5.1 Income groups 228

6.5.5.2 Regional groups 231

6.5.5.3 Sectoral results vs aggregation results 232

6.5.6 Vegetables and fruit (s2-05) 234

6.5.6.1 Income groups 235

6.5.6.2 Regional groups 239

6.5.6.3 Sectoral results vs aggregation results 240

6.5.7 Coffee, tea, cocoa, spices, and manufactures (s2-07) 242

6.5.7.1 Income groups 243

6.5.7.2 Regional groups 246

6.5.7.3 Sectoral results vs aggregation results 247

6.5.8 Crude rubber (including synthetic and reclaimed) (s2-23) 249

6.5.8.1 Income groups 250

6.5.8.2 Regional groups 253

6.5.8.3 Sectoral results vs aggregation results 254

6.5.9 Cork and wood, (s2-24) 256

6.5.9.1 Income groups 257

6.5.9.2 Regional groups 260

6.5.9.3 Sectoral results vs aggregation results 261

6.5.10 Coal, coke and briquettes (s2-32) 263

6.5.10.1 Income groups 264

6.5.10.2 Regional groups 267

6.5.10.3 Sectoral results vs aggregation results 269

6.5.11 Textile yarn, fabrics, made-up articles, related products, (s2-65) 271

6.5.11.1 Income groups 272

6.5.11.2 Regional groups 276

6.5.11.3 Sectoral results vs aggregate results 277

6.5.12 Non-metallic mineral manufactures (s2-66) 279

6.5.12.1 Income groups 280

6.5.12.2 Regional groups 284

6.5.12.3 Sectoral results vs aggregation results 285

6.5.13 Manufactures of metals (s2-69) 287

6.5.13.1 Income groups 288

6.5.13.2 Regional groups 292

6.5.13.3 Sectoral results vs aggregation results 293

6.5.14 Power generating machinery and equipment (s2-71) 295

6.5.14.1 Income groups 296

6.5.14.2 Regional groups 299

6.5.14.3 Sectoral results vs aggregation results 300

6.5.15 Office machines and automatic data processing equipment (s2-75) 302

6.5.15.1 Income groups 303

6.5.15.2 Regional groups 307

6.5.15.3 Sectoral results vs aggregation results 308

6.5.16 Telecommunications, sound recording and reproducing equipment, (s2-76) 310

6.5.16.1 Income groups 311

6.6.16.2 Regional groups 314

6.6.16.3 Sectoral results vs aggregation results 316

6.5.17 Electric machinery, apparatus and appliances, and parts (s2-77) 318

6.5.17.1 Income groups 319

6.5.17.2 Regional groups 322

6.5.17.3 Sectoral results vs aggregation results 323

6.5.18 Furniture and parts, (s2-82) 326

6.5.18.1 Income groups 327

6.5.18.2 Regional groups 330

6.5.18.3 Sectoral results vs aggregation results 331

6.5.19 Travel goods, handbags and similar containers, (s2-83) 333

6.5.19.1 Income groups 334

6.5.19.2 Regional groups 337

6.5.19.3 Sectoral results vs aggregation results 338

6.5.20 Miscellaneous manufactured articles, (s2-89) 340

6.5.20.1 Income groups 341

6.5.20.2 Regional groups 345

6.5.20.3 Sectoral results vs aggregation results 346

6.5.21 Other sectors 348

6.6 IMPACTS OF GRAVITY VARIABLES: A COMPARISON BETWEEN SECTORS 349

6.6.1 The impacts of economic sizes on sectoral exports 349

6.6.2 The impacts of economic development on sectoral exports 352

6.6.3 Pattern of bilateral export flows by sectors 355

6.6.4 The impacts of exchange rate on sectoral exports 357

6.6.5 The impacts of domestic openness on sectoral exports 360

6.6.6 The impacts of foreign openness on sectoral exports 362

6.6.7 The impacts of trade costs on sectoral exports 364

6.6.8 The impacts of ASEAN membership on sectoral exports 367

6.6.9 The impacts of the APEC membership on sectoral exports 370

6.6.10 The impacts of WTO membership on sectoral exports 373

6.7 CONCLUSION AND REMARKS 375

CHAPTER 7 377

7 SUMMARY AND CONCLUSION 377

7.1 INTRODUCTION 377

7.2 CONTRIBUTIONS OF THE DISSERTATION 377

7.3 FINDINGS 380

7.3.1 Aggregate export analysis 381

7.3.2 Sectoral results 385

7.4 POLICY IMPLICATIONS 388

7.5 LIMITATION OF THE DISSERTATION 393

Reference 398

APPENDIX 407

APPENDIX A 407

APPENDIX B 432

Table 2.4 C: Economic performance amongst ASEAN member countries, 2009-2013 19 Table 2.4 D: Foreign Direct Investment inflows of Vietnam after joining WTO, 2009-2013 19 Table 2.4 E: Good export values of Vietnam after joining WTO by major trading partners, 2009-2013

Table 2.5: Economic indicators of domestic economy, Vietnam, 1990-2009 21 Table 2.6: Investment shares by ownerships, Vietnam, 1995-2010 (percentage) 22 Table 2.7: Time line and events for economic integration, Vietnam (1986-2008) 23 Table 2.8: Key points of world economic integration, Vietnam (1986-2007) 24 Table 2.9: Trade shares of major trading partners in the period 1995-2009 (percentage) 27 Table 2.10: The performance of Vietnamese exports and imports with respect to different major

Table 2.11: Key exports to and imports from Japan for the first seven months, 2011 35 Table 2.12: Trade balance of Vietnam to European Union, 1995-2009 (US$ million) 36 Table 3.1: Theoretical foundation for gravity equation classified by different trade theories 67 Table 3.2: Empirical studies on bilateral trade flows for the specific country case – The gravity

Table 4.1: Summary of the signs of proposed impacts from augmented gravity models 91 Table 4.2: Foreign direct investment projects licensed by main counterparts (Accumulation of

projects having effect as of 31/12/2013) by main counterparts and items 92 Table 4.3: Different versions of null and alternative hypothesis (LLC unit root test, 2002) 98

Table 5.10: Long-run results of export models by income country groups – Nominal terms 124

– Real terms

Table 5.11A: Long-run results of model 4.5, Income groups 129 Table 5.11 B: A comparison of long-run models, model 4.5 vs models 4.7-4.9, Income groups 130 Table 5.12: Long-run results of export models by regional country groups – Nominal terms 132 Table 5.13: Long-run results of export models by regional country groups – Real terms 136 Table 5.13 A: Results of model 4.5, Fixed effect regression, Regional groups 140 Table 5.13 B: Bias in estimated coefficients caused by multicollinearity of income – sourced

Table 5.14: Short-run results of export models by income country groups – Nominal terms 146 Table 5.15: Short-run results of export models by income country groups, Real terms 147 Table 5.16: Short-run results of export models, Regional country groups – Nominal terms 150 Table 5.17: Short-run results of export models, Regional groups – Real terms 152 Table 5.24: The impacts on bilateral exports with respect trading partners by income groups, Nominal

Table 5.25: The impacts on bilateral exports with respect to regional groups, nominal and real term

Table 6.6 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners, sector “Articles of apparel and clothing accessories”, SITC, Rev.2 (x84) 196 Table 6.6: Results of export sector “Articles of apparel and clothing accessories”, SITC, Rev.2 (x84)

199 Table 6.6 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral estimation and aggregate estimatio n for sector “Articles of apparel and clothing accessories”, SITC,

Table 6.7 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners, sector “Petroleum, petroleum products and related”, SITC, Rev.2 (x33) 204 Table 6.7: Results of export sector “Petroleum, petroleum products and related”, SITC, Rev.2 (x33)

206 Table 6.7 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral estimation and aggregate estimation for sector “Petroleum, petroleum products and related”, SITC,

Table 6.8 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners,

Table 6.8 Results of export sector “Footwear”, SITC, Rev.2 (x85) 213 Table 6.8 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral estimation and aggregate estimation for sector “Footwear”, SITC, Rev.2 (x85) 218 Table 6.9 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners, sector “Fish, crustacean and molluscs, and preparations”, SITC, Rev.2 (x03) 219 Table 6.9: Results of export sector “Fish, crustacean and molluscs, and preparations”, SITC, Rev.2

233 Table 6.11 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners,

Table 6.11: Results of export sector “Vegetables and fruit”, SITC, Rev.2 (x05)

Table 6.11 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral estimation and aggregate estimation for sector “Vegetables and fruit”, SITC, Rev.2 (x05) 241 Table 6.12 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners, secto r “Coffee, tea, cocoa, spices, and manufactures”, SITC, Rev.2 (x07) 242 Table 6.12: Results of export sector “Coffee, tea, cocoa, spices, and manufactures”, SITC, Rev.2

Table 6.13 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral estimation and aggregate estimation for sector “Crude rubber, including synthetic and reclaimed”,

Table 6.14 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners,

Table 6.14: Results of export sector “Cork and wood”, SITC, Rev.2 (x24) 258 Table 6.14 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral estimation and aggreg ate estimation for sector “Cork and wood”, SITC, Rev.2 (x24) 262 Table 6.15 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners,

Table 6.15: Results of export sector “Coal, coke and briquettes”, SITC, Rev.2 (x32) 265 Table 6.15 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral and aggregate estimations for sector “Coal, coke and briquettes”, SITC, Rev.2 (x32) 270 Table 6.18 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners, sector “Textile yarn, fabrics, made-up articles, and related products”, SITC, Rev.2 (x65) 271 Table 6.18: Results of export sector “Textile yarn, fabrics, made-up articles, and related products”,

Table 6.18 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral estimation and aggregate estimation for sector “Textile yarn, fabrics, made-up articles, and related

Table 6.19 A: The top twenty trading partners of Vietnam with respect to bilateral imports and bilateral exports, 1997-2010, sector “Non-metallic mineral manufactures”, SITC, Rev.2 (x66) 279

Table 6.19: Results of export sector “Non-metallic mineral manufactures”, SITC, Rev.2 (x66) 282 Table 6.19 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral estimation and aggregate estimation for sector “Non-metallic mineral manufactures”, SITC, Rev.2

Table 6.21 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners,

Table 6.21: Results of export sector “Manufactures of metals”, SITC, Rev.2 (x69) 289 Table 6.21 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral estimation and aggregate estimation for sector “Manufactures of metals”, SITC, Rev.2 (x69) 294 Table 6.22 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners, sector “Power generating machinery and equipment”, SITC, Rev.2 (x71) 295 Table 6.22: Results of export sector “Power generating machinery and equipment”, SITC, Rev.2

Table 6.23 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral estimation and aggregate estimation for sector “Office machines and automatic data processing

Table 6.24 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners, sector “Telecommunications, sound recording and reproducing equipment”, SITC, Rev.2 (x76) 310 Table 6.24: Results of export sector “Telecommunications, sound recording and reproducing

Table 6.24 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral estimation and aggregate estimation for sector “Telecommunications, sound recording and

Table 6.25 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners, sector “Electric machinery, apparatus and appliances, and parts”, SITC, Rev.2 (x77) 318 Table 6.25: Results of export sector “Electric machinery, apparatus and appliances, and parts”, SITC,

Table 6.25 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral estimation and aggregate estimation for sector “Electric machinery, apparatus and appliances, and

Table 6.27 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners,

Table 6.27: Results of export sector “Furniture and parts”, SITC, Rev.2 (x82) 328 Table 6.27 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral estimation and aggregate estimation for sector “Furniture and parts”, SITC, Rev.2 (x82) 332 Table 6.28 A: Total trade contribution over the period 1997 - 2000 of the top 20 trading partners, sector “Travel goods, handbags and similar containers”, SITC, Rev.2 (x83) 333 Table 6.28: Results of export sector “Travel goods, handbags and similar containers”, SITC, Rev.2

Table 6.36: Estimated impacts of distance variable on bilateral export sectors by different country

Table 5.1: Trading partner panels by geographical and income classifications 407 Table 5.2: Data sources and definitions of gravity export model variables 409 Table 5.3: Series variable statistical description – The gravity export estimation, Vietnam, 1986-2010

412 Table 5.4: Correlations between the income-sourced variables, nominal and real terms 414 Table 5.5: Test statistic values of Panel unit root tests, nominal and real bilateral exports, Vietnam

Table 5.6: Test statistic values of Panel unit root tests for independent variables of export gravity

Table 5.7: Cointegration test results for gravity export models – Pedroni test 418 Table 5.8: Cointegration test results for gravity export models – Kao test 421 Table 5.9: Cointegration test results for gravity export models, ADF-Fisher typed test 422 Table 5.18: Descriptive statistics of variable series, different country groups, Singapore export

Table 6.16 A: The top twenty trading partners of Vietnam with respect to bilateral imports and exports, sector “Chemical materials and products” 1997-2010, SITC, Rev.2 (x59) 438 Table 6.16: Results of export sector “Chemical materials and products”, SITC, Rev.2 (x59) 439 Table 6.16 B: Estimated impacts on Vietnamese bilateral exports, the comparison between sectoral estimation and aggregate estimations for sector “Chemical materials and products”, SITC, Rev.2

Table 6.17 A: The top twenty trading partners of Vietnam with respect to bilateral imports and exports, sector “Rubber manufactures”, 1997-2010, SITC, Rev.2 (x62) 442 Table 6.17: Results of export sector “Rubber manufactures”, SITC, Rev.2 (x62) 443 Table 6.17 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral and aggregate estimations for sector “Rubber manufactures”, SITC, Rev.2 (x62) 445 Table 6.20 A: The top twenty trading partners of Vietnam with respect to bilateral imports and exports, 1997-2010, sector “Iron and steel”, SITC, Rev.2 (x67) 446 Table 6.20: Results of export sector “Iron and steel”, SITC, Rev.2 (x67) 447 Table 6.20 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral and

Table 6.26 A: The top twenty trading partners of Vietnam with respect to bilateral imports and exports, 1997-2010, sector “Road vehicles”, SITC, Rev.2 (x78) 450 Table 6.26: Results of export sector “Road vehicles”, SITC, Rev.2 (x78) 451 Table 6.26 B: Estimated impacts on Vietnamese bilateral exports, a comparison between sectoral and aggregate estimations for sector “Road vehicles”, SITC, Rev.2 (x78) 453

LIST OF FIGURES

Figure 2.1: Averaged Gross Domestic Products, Vietnam, 1986-2009 14

Figure 2.2: Averaged Gross domestic product per head, Vietnam, 1986-2009 15

Figure 2.3: Trade performances, measuring in million US$, 1990-2009 15

Figure 2.4: Foreign direct investment inflows in Vietnam, 1986 - 2010 (US$ bil) 17

Figure 2.5: Export values of individual trading partners in 2006 and 2009 (US$ mil.) 27

Figure 2.6: Good Exports to major trading partners, averaged volumes, 1995-2009, (US$ mil.) 27

Figure 2.7: Import values of individual trading partners in 2006 and 2009 (US$ mil.) 28

Figure 2.8: Good imports to major trading partners, averaged volume, 1995-2009, (US$ mil.) 28

Figure 2.9: Vietnam’s good exports to ASEAN member countries, averaged volume 32

Figure 2.10: Vietnam’s good imports from ASEAN member countries, averaged volume 32

Figure 5.1: The performance of nominal and real bilateral exports with 54 trading partners, Vietnam (1986-2010) 153

Figure 5.2: Inflation rate of Vietnam measuring by GDP deflator, 1986-2010 154

Figure 5.3: Volume of bilateral exports of commodities amongst ASEAN countries 159

The volume of international trade flows has likely increased over time; and to address the

determinants of international trade is one of major concerns amongst trade economists This is

also the case for Vietnam that has been in transition The country integrated into the global

economy through trade whilst moving from a command to a market economy in the last three

decades, and has experienced a significant increase in international trade activities During the

last thirty years of development, the country has become one of the most dynamic economies in

the Asian region Economic development during this time has greatly relied on international

trade Over the years, Vietnam has become the member of most recognized trade organizations:

Association of South East Asian Nations – ASEAN (1995); Asian Pacific Economic Corporation – APEC (1998); and the World Trade Organization – WTO (2007)

Trade and world economic integration have been as the impetus for accelerating the

well-beings of the domestic Vietnamese communities and international community in the region

However, an understanding of the link between trade and economic integration from the

perspective of Vietnam is missing Empirical studies on Vietnamese trade are in lack to address

these determinants (see, Le et al., 1996; Nguyen, 2010) It is, therefore, pertinent to understand

the key determinants of Vietnamese trade over the world integration process This thesis

identifies the key factors that have driven the impressive growth of Vietnamese exports during

the world economic integration process (1986-2010) Importantly, this study applies the gravity

equation to investigate these factors by the two aspects, namely, the aggregate and sectoral

exports analysis

The gravity equation has been applied in empirical studies to examine bilateral trade

flows I make use of this equation in addressing the key determinants of Vietnamese export

flows The applied models for Vietnamese exports are based on Frankle (1993) The models are,

then, examined with the panel estimation method, including the fixed effect technique Panel unit

root tests and cointegration tests are also performed to examine the short-run and long-run

determinants of the aggregate and sectoral (bilateral) exports This study focuses on a large

sample of 54 main trading partners of Vietnam over a 25-year period This large sample is

divided into different country groups with two categories: income and regional basis, which

provides important insights on how the trade policy should look like by different trading partners

For sectoral analysis, 24 key exporting sectors are selected

The aggregate bilateral gravity models introduce useful information to explain the

determinants of bilateral exports of Vietnam Generally, such factors as economies of scale,

economic development, exchange rate, domestic openness, trade costs, and regional trade

agreements (the memberships of ASEAN and APEC) are found to contribute to the performance

of total bilateral exports However, the results suggest that openness of trading partners has not

been always beneficial for total exports of Vietnam Similarly, the WTO membership tends to

divert Vietnam’s bilateral exports to non-member trading partners for most country panels; there was an exception that this membership was to raise exports to member-trading partners in the

lower high-income group (for nominal exports), and the American group (for real exports)

Additionally, a comparison of Vietnam and Singapore (an Asian country that is economically

better positioned than Vietnam) is carried out using the same models I found that both results are

rather consistent, since they point out that export flows in both cases are, as expected, driven by

economies of scale, economic development, the Heckscher – Ohlin trade pattern, bilateral exchange rates, domestic openness, and the APEC trade arrangement

The outcomes of sectoral estimations address the key determinants by accounting for the

bilateral exports for a large number of key export sectors The results confirm important roles of

economic sizes, economic development, endowment difference, domestic openness, bilateral

exchange rate, trade costs, the ASEAN and APEC trade arrangements in determining sectoral

bilateral exports of Vietnam However, the sectoral study also points out that the influence of

some gravity variables, such as foreign openness or WTO trade preference, are not in line with

the thesis’ hypothesis These results are consistent to those from the aggregate analysis I also comprehensively assessed the sensitivity of bilateral exports responding to the individual trade

determinant across selected sectors; and this practice aimed to derive policy implications for each

of 24 sectors

on exports in nominal and real terms These results are compared with Singapore, one of the richer Asian nations In the sectoral analysis, this study focuses on 24 key exporting sectors of Vietnam The modeling and estimation framework developed here are applied consistently across the aggregate and sectoral analyses of bilateral exports Importantly, the sample of trading partners is divided into sub-groups by income and regional classifications, which will provide more insights into the determinants of bilateral export amongst different country groups

The rest of the chapter is organized as follows Section 1.2 examines the motivation of the dissertation Section 1.3 clarifies the aims of this study Section 1.4 highlights the rationale of the study Section 1.5 provides a brief overview of how the dissertation is organized, while the final section provides a summary of the chapter

1.2 MOTIVATION OF THE DISSERTATION

Over the last 30 years of development, Vietnam has emerged as one of the dynamic emerging economies in the Asian region The country has experienced astonishingly high successive rates

of growth in the period 1986-2009 with average economic growth of 6.9 per cent annually

(World Bank Statistics, 2011) Per capita gross domestic products (GDP) rose from roughly US$

(International Monetary Fund Databases, 2010) The net flows of foreign investment, mainly

direct investment capital has surged in domestic economy constituting a critical part of the whole nation’s investment capital stock

The outstanding economic growth might be contributed from significant increase in trade since 1995 Total trade volume remained rather low in early 1990s staying at US$ 3.5 billion in 1990; however it reached nearly US$ 13 billion in 1995 and quickly increased to US$ 82.5 billion

in 2006 Vietnamese trade significantly increased since the country became a member of World Trade Organization (WTO) with total trade increased further by US$ 107 billion in 2007, peaked roughly at US$ 140 billion in 2008 On average, total export volume grew at the annual rate of 17

per cent in the period 1990-2009 (International Monetary Fund Databases, 2011)

Impressive growth of Vietnam’s trade volume in the period has been in questions among authors There are number of studies, such as Jenkins (2004), Schmidt (2004), Pincus (2009) concentrating on examining the stable growth of Vietnam’s trade performance in the world economic integration However, a more fundamental issue for the trade growth that has been raised recently is which factors drive Vietnam’s trade flows within the global economic integration process Le et al (1996) asserted that trade volume between Vietnam and Asia Pacific countries in early stage of trade liberalization was due to economic sizes, economic development levels and geographical distance Gates (1998) investigating the effects of ASEAN Free Trade Area on Vietnam’s trade pattern concluded the major determinants of bilateral trade flows between Vietnam and ASEAN members as: close distance between ASEAN members, lower transport costs, and good information on markets and trade policies

Although the current studies on Vietnam’s trade have revealed significant changes in country’s foreign trade components, especially from primary product exports to manufacturing product exports, it is not clear which trade theory is closely associated with these drastic shifts Furthermore, given the strong emphasis on export diversification and diversified trade preferences in Vietnam, the determinants of such trade patterns of specific groups of exporting products have not been dealt in the literature yet In addition, it is certain that Vietnam’s trade has changed significantly during different stages of the economic integration process1 that Vietnam has pursued, but whether associated with the increase in Vietnamese trade was a result of the economic integration process or other factors have been not comprehensively investigated

1

The time line of economic integration for the case of Vietnam is comprehensively demonstrated by Abbott (2008)

1.3 AIMS OF THE DISSERTATION

This research investigates the determinants of Vietnam trade flows, in terms of exports, over the period the country became truly integrated into the international market The thesis applies the gravity model approach to carry out this investigation

The main research questions as follows:

 How does Vietnam’s trade change over the process of world economy integration; and what are the economic implications beyond that change?

 To what extent, do geographical distances between Vietnam and its trading partners affect Vietnam’s bilateral export flows?

 To what extent, do the economic sizes of Vietnam and its trading partners matter in determining the bilateral export flows of Vietnam?

 To what extent, do the levels of development of trading partners and domestic economy raise bilateral export volume of Vietnam?

 Do the trade preferences such as ASEAN, APEC, and WTO that Vietnam is a member, actually stimulate export flows of Vietnam?

 To what extent, do openness levels of Vietnam and trading partners affect bilateral export flows of the country?

 To what extent, how does the additional element namely bilateral exchange rate, influence Vietnam’s export flows?

 Which trade theory would be consistent to the Vietnam’s export flows in the process of world economic integration?

 How are the real affects vs nominal effects on aggregate exports different?

 Are the impacts on bilateral exports consistent among countries of interest, Vietnam vs Singapore?

1.4 RATIONALE OF THE DISSERTATION

The empirical study of bilateral trade for a dynamic and developing economy of Vietnam is

First, Vietnam’s trade volume has considerably increased in the midst of economic integration, diversification of exports, and trade preferences It is, therefore, necessary to understand the importance of such factors in driving trade flows and trade structure in Vietnam Although these issues are addressed in various studies, especially by Gates (1998), McCarty (2001), Schmidt (2004), Abbott (2008), Athukorala (2009), the studies on Vietnam’s trade determinants lack in depth analysis of these factors

Le et al (1996) studied Vietnam’s trade in relation to the ASEAN and Asia-Pacific countries The key determinants of bilateral trade flows between Vietnam and countries in Asia-Pacific region were economic sizes, economic development, and distance However, the study covered a short period (1989-1994), and concentrated only on aggregate data analysis Nguyen (2010) researched Vietnam’s exports in dynamic fashion The author pointed out various factors: domestic economic size, trade partner’s economic size, distance, economic development, exchange rate, and trade preference (ASEAN) as having remarkable impacts of Vietnam’s trade flows However, he did neither mention trade on a disaggregate level nor link the existing trade pattern association with relevant trade theory to the case of Vietnam

This study will deal with a much broader scope It covers the whole period of economic integration of Vietnamese economy (1986-2010), and performs both aggregation and disaggregation trade analysis It also seeks to understand the respective trade theories that would

be consistent to Vietnam’s trade flows Hence, the study is able to fill the gap in the existing literature on Vietnam’s trade

Second, the study develops a unique method of carrying out the gravity model

estimations Building on the two-stage estimation procedure from Antonucci and Manzocchi (2006), and Bussiere and Schnatz (2009) which examines the time-variant and time constant variables separately, the thesis attempts to avoid the multicollinearity problem that is often present in the gravity models This methodology accounts for three income-sourced variables – in particular, the product of incomes, product of per capita incomes, and per capita income difference This multicollinearity problem leads to serious bias in the estimation of the gravity coefficients To avoid this bias, rather than placing these variables together, the study separates the variables into three different gravity models While this procedure is more laborious, we find that it actually leads to results that are more consistent with theory Furthermore, the bilateral export flows during the period of Vietnam’s integration are empirically examined within the

short-run and long-run perspectives Both these perspectives are fully informed by the panel unit root and panel conitegration tests This estimation framework has not been seen in the gravity literature As a result, currently, there is no clear understanding of whether gravity variables have similar or different effects in the two time horizons This analysis will provide new insights into the workings of the gravity variables in the long- and short-run

Third, while several authors have developed theoretical foundations for the gravity

equation, none of them provides a consolidated or a systematic knowledge of these theories The theoretical considerations on gravity trade equation presented in this thesis are structured systematically to fill this gap The research will provide a comprehensive literature review on the theoretical foundations of the gravity trade equation This part of the thesis will identify the trade theories that are consistent with the gravity equation and examine how these theoretical foundations have evolved over time

Fourth, empirical studies that examine international trade flows by applying the gravity

equation approach have mainly concentrated on bilateral trade within regions or trading blocks Only few studies focus on specific countries and their trading partners These are Wall (1999), Pass (2000), Rahman (2003), Batra (2004), Sohn (2005) and Nguyen (2010) This research relates to the literature that explores the case for bilateral trade model for a specific country – in our case the specific country is Vietnam

1.5 ORGANIZATION OF THE DISSERTATION

The rest of the thesis is structured as follows Chapter 2 provides an overview on Vietnamese economic development, Vietnam’s trade performance in relation to specific trading partners, and world economic integration process Chapter 3 covers the literature, theoretical and empirical studies on gravity model while chapter 4 presents in detail the methodology, including the gravity export equations, the econometric techniques that will be applied, and a description of data Bilateral export models, in aggregate basis, are estimated and examined in Chapter 5 Chapter 6 examines the determinants for bilateral exports dealing with sectoral data Finally, Chapter 7 covers the conclusion of whole thesis by highlighting the contributions, key findings, policy implications, and limitation of the thesis

1.6 SUMMARY

It seems that there is, empirically, little evidence on the determinants of bilateral exports of Vietnam since the country joined the regional and global markets in 1986 To achieve an understanding of the key factors influencing bilateral export flows of Vietnam, this study applies the gravity equation approach, which is widely employed in the study of trade The standard gravity equation is further modified to include other important variables such as openness, exchange rate, and trade agreements (ASEAN, APEC, and WTO) This model is estimated for aggregate and sectoral data The study relies on panel fixed effect and OLS methods The large sample of 54 major trading partners of Vietnam is decomposed by income and regional categories The outcomes from aggregate and sectoral estimations will provide useful implications for trade policy of Vietnam

YEARS

Vietnam possesses several favorable conditions for economic development The country lies in the Indochina Peninsula region within the South East of Asia, its neighbors being China in the north, Laos and Cambodia in the west; and most of the east is long coastline approaching the Indochina Sea This location is the most important area for shipping of commodities within the region and international trade as well In terms of natural resources, the country is endowed with densely tropical forests, mostly in the North and Central regions Moreover, mineral resources such as coals, alumina, iron ore, cooper are unevenly endowed across the country With its long coastline of 3,444 km length, Vietnam has not only inherited of a large stock of aquacultures and tourism, but oil and gas are also potential endowments Furthermore, hot and warm climate with high level of rainfall provide favorable conditions for agricultural production One of significant determinants for its development is abundant labor resource Although the total area land of

Vietnam is 331,698 km2, population size has remained at high level over time, about 87 millions

in 2009, making Vietnam the 13th largest populous country in the World (World Bank, 2010)

Despite such natural resources, Vietnam started its development with low economic base after its unification in 1975 IMF reported that during the period 1980-1985, averaged GDP per head of the country stood at US$ 441, and US$ 398 measured by PPP2 This modest living standard informed the fact that the country was one of the poorest nations with little chance to overcome current stagnation situation throughout the 1980s, Glewwe et al (2004) Moreover, the physical infrastructure conditions supporting for the economic growth are significanlty inadequate Adequate infrastructure in the South of Vietnam had been remained without relevant maintenance during this period, Dollar (1994)

Over the ten-year period (1975-1985) under the command economic system, the weaknesses of the economy had been considerably impeding its development As evident from Table 2.1 and Table 2.2, in comparison with Association of South East Asian Nations (ASEAN) member countries, the living standard of Vietnam was very poor in this period Investment capacity remained at low levels with a constant share of 14.3 percent of GDP Domestic saving was, on average, not only far lower than, but also fluctuated strongly on year-by-year basis Inflation rate persisted at high levels through the period, especially in 1982 and 1985

The year 1986 certaintly marked a milestone for Vietnam economy’s transformation The government launched the renovation under the name “Doi Moi” that ultimately transited economic system from centralized economy to so-called “Socialist market-oriented economy” Admittedly, the target production assigned by the state was removed; however, the state sector still dominated the domestic economy The transition to market-oriented economy came with key reforms Crucial markets such as real estate, labor, capital, and monetary markets saw a removal

of market barriers such as irrelevant state legislations and local regulations Additionally, government pursued a trade reform by undertaking openness policy that allowed the operation of the foreign trade The government also introduced foreign investment policy to call for international investors Notably, this renovation was the first act of government to stimulate the private sector that was mostly restricted in the command economy

Table 2.1: Gross domestic product per head, based on purchasing power parity (PPP), ASEAN

group, 1980-1985 (Current US$)

Source: International Monetary Fund, World Economic Outlook Database, September 2011

Table 2.2: Selected macroeconomic indicators of Vietnam in the post war period, 1980-1985

Inflation rates, average

consumer prices

Source: International Monetary Fund, World Economic Outlook Database, September 2011

Vietnam’s participation in the ASEAN (1995) was likely the important move towards regional economic integration Further, the country became an official member of WTO in 2007 after a decade of negotiation rounds These moves towards trade integration have been the fundamental factors to achieving an astonishing economic growth afterward Accessing trade preferences such as ASEAN and WTO considerably allowed the country to expand her foreign markets, to appeal international investors, and explore advanced technology Table 2.3 compares Vietnam’s economy with other countries in the ASEAN group over the period 2001- 2009

Economic reforms seem to bring about such impressive achievements As evident from Figure 2.1, and 2.2, average GDP in period 1986-1996 was just US$ 20 billion After joining to ASEAN, the country attained a double rise for the period 1997-2006 This figure climbed up to about US$ 85 billion just after two year of being the official WTO member by 2007; that is over four folds, and twice of that of period 1986-1996, and 1997-2006, respectively Moreover, the explicit enlargement of GDP per head from 1986 to 2009 had revealed the improvement in the

living standard of Vietnam GDP per head was only over US$ 200 in period 1986-1996, but expanded to roughly US$ 400 in period 1997-2006, and peaked in period 2007-2009 at nearly US$ 900, about an increase of four folds over the whole period

Table 2.3: Position of Vietnam in ASEAN group, by selected indicators, 2001-2009

Source: ASEAN statistics 2011 ( http://www.asean.org); Note: (a) GDP measures at current prices in billion US

dollars; (b) GDP per head measures at current price in US dollars; (c) GDP growth rate is measured by %; and (d) Population is measured in million

Figure 2.1: Averaged Gross Domestic Products, Vietnam, 1986-2009

Source: International Monetary Fund Statistics, 2010

GDP, Current price (Billion US$)

GDP, Constant price (Billion US$, 2005=100)

The further milestone in economic development was likely the impressive performance in trade activity Figure 2.3 shows the trade performance for the period of 1990-2009 Both imports and exports started at very low levels in 1990 However, since 1995, when Vietnam joined ASEAN, exports started to increase remarkably This increase has operated continuously and reached a peak in 2008, then slowly dropped but remained at high levels afterward Export performance has obtained a momentous growth rates with average rate of 14.7 percent over the entire period It is also noticeable that import performance has had the similar trend as that of exports with average growth rate recorded at 15.6 per cent in the same period

Figure 2.2: Averaged gross domestic product per head, Vietnam, 1986-2009

Source: International Monetary Fund Statistics, 2010

Figure 2.3: Trade performances, measuring in million US$, 1990-2009

Source: Asian Development Bank Data, 2010

Since 2007, the domestic economy has become more open as measured by the ratio of trade in total domestic production capacity - GDP Table 2.4 indicates that trade share is plausible over the period Between 1990 and 2001, this ratio is persistent to reach to 100 per cent Nonetheless, since 2002 the country has witnessed with a series of higher level of trade share over 100 percent, i.e the value of trade has exceeded that of GDP for relative years Significantly, by 2008 trade share reached at highest level of 160 per cent, approximately It is clearly that the averaged trade share in 2000s is remarkably greater than the averaged trade share

in 1990s

Table 2.4: Trade shares of GDP and Trade deficits, Vietnam, 1990-2009

Years

GDP (US$ billion)

Trade volume Trade deficits

% (a)

Trade share of GDP, % (b) (US$ billion)

Source: Asian Development Bank Database; and International Monetary Fund Statistics, 2010

Note: (a) Trade deficits are calculated by data available from Asian Development Bank Database (2010); (b) GDP

data is sourced from International Monetary Fund Statistics in deriving corresponding trade shares of GDP

Nonetheless, sound performance of exports has been mostly coming along with larger volume of respectively imports for every single year within the period (see, Figure 2.3) This figure implies that the country has experienced persistently high trade deficits, more seriously when the trade deficits seem to expand in recent years

Foreign investment has likely played a crucial role for economic growth since 1986 Favorable conditions, such as cheap land rent, administrative procedures, upgraded infrastructure, and business tax exemptions were introduced to foreign investors The net foreign direct investment inflows surged in domestic economy constituting a critical part of the whole nation’s investment capital stock over the last thirty years The figure 2.4 shows the increasing trend in FDI inflows to Vietnam since 1986

Figure 2.4: Foreign direct investment inflows in Vietnam, 1986 - 2010 (US$ billion)

Source: World Bank Databases, 2011

Table 2.4 A: Investment by types of ownership by items, year and types of ownership

(percentage)

Foreign invested sector

We also examine the importance of aggregate foreign direct investment to Vietnam’s economic growth and trade

Table 2.4A reveals the share of FDI in total Vietnam’s investment between 1995 and

2009 of the country FDI contribution to investment was rather stable during the first few years of regional integration (ASEAN participation in 1995) with the share of 26 to 30 percent of total investment between 1995 and 1998; and world integration (WTO joining in 2007) with the share from 24 to 31 percent during 2007 and 2009 Although state investment has dominated other sectors, those of FDI and private sectors show an increasing trend during integration period

Table 2.4 B highlights that foreign investment firms are important to the country’s export performance Good exports of foreign invested area as the share on total exports has increased over time as compared to those of domestic firms, which actually fell

Table 2.4 B: Exports of goods by kinds of economic sectors and by commodity group by items, Economic sector and year (percentage)

Source: The General Statistic Organization of Vietnam, 2013

Given by the strong economic growth, and sound performance of trade and investment, further indicators may explain the picture of Vietnam’s economy (see, Table 2.5) The country successfully controlled unemployment rates at a minimum level recently, just fewer than 2.5% for period 1999-2007 While the inflation rates measuring by annual GDP deflator were high in first half of 1990s, the annual GDP deflator significantly fell to one digit since 1996 lasting until

a surge in 2008 As an over view, inflation rate was controlled during 2000s However, the CPI (Consumer price index) showed that the general price level has inflated, especially for the second half of the period 2000s

The Vietnamese economy has continued to grow strongly beyond 2009 Over the period 2010-2013, the domestic economy grew by around 5 % annually The living standard of Vietnam (as measured by GDP per capita) also continued to increase beyond 2009, growing by from US$

1230 in 2009 to US$ 1900 in 2013, roughly These were liekly driven by investment and foreign trade (see, Table 2.4 C, Table 2.4 D, and 2.4 E) Total exports of goods to the world doubled within the five years During the recent five years, the United States of America, European Union, and ASEAN remained the largest markets of Vietnamese exportable commodities

Table 2.4 C: Economic performance amongst ASEAN member countries, 2009-2013

Table 2.4 D: Foreign Direct Investment inflows of Vietnam after joining WTO, 2009-2013

Years Total registered capital Implementation capital Total State Non- State Foreign invested sector

Table 2.4 E: Good export values of Vietnam after joining WTO by major trading partners,

2009-2013 (in current US$ Billion)

Source: International Monetary Fund, 2014 (Direction of Trade, IMF Database, www.imf.org)

However, a number of concerns amongst authors have emerged Common questions in

this manner are (i) is this economic development stable?; (ii) are the current policies implemented

efficient for middle and long-run development goal or just for such a temporary beginning stage

of development?; and (iii) will the country overcome the “average income trap” in the near future? Dollar (1994) argued that the sound social economic development within the renovation process may be temporary, and he urged that the country might not attain sustainable economic growth if further reforms such as institutional upgrade, financial system improvement were not coming into effect Indeed, development did not equally distribute since there was a large regional disparity Economic growth occurred in urban areas, while in the rural areas development lagged behind suffering from low employment and persistent poverty (Kokko, 1998) Recently, Pincus (2009) raised concerns about the negative impacts of 2008 international economic downturn on Vietnam’s economy He noted that real GDP growth rate had dropped from 8.5 % in 2007 to 6.2 % in 2008 Moreover, it is also noticeable that inflation rate was one of the highest in the ASEAN region; and large trade deficit as a percentage of GDP was persistent The following discussions address current weaknesses of domestic economy

The first backwardness is persistent trade deficit This had increased significantly since the start of renovation process, particularly when domestic economy opened to the international economy From Table 2.4, it is clear that the more country exposes to the world market, the larger are the trade deficits Particularly, trade deficits, in terms of percentage of GDP, grew from a small amount of less than 5 percent in the first years of 1990s, but increased over 15 percent between 1996 and 2006 The trade deficits expanded further after the country attained the